LOCAL 1115, NURSING HOME, ETC. v. HIALEAH CONVAL. HOME, INC.

• Decision Date: 26 September 1972
• Docket Number: No. 71-1963-Civ-JLK.,71-1963-Civ-JLK.
• Citation: 348 F. Supp. 405
• Parties: LOCAL 1115, NURSING HOME, HOSPITAL, SENIOR CITIZENS HOTEL UNION, an unincorporated independent association, Plaintiff, v. HIALEAH CONVALESCENT HOME, INC., a Florida corporation, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

348 F. Supp. 405

LOCAL 1115, NURSING HOME, HOSPITAL, SENIOR CITIZENS HOTEL UNION, an unincorporated independent association, Plaintiff, v. HIALEAH CONVALESCENT HOME, INC., a Florida corporation, et al., Defendants.

No. 71-1963-Civ-JLK.

United States District Court, S. D. Florida.

September 26, 1972.

COPYRIGHT MATERIAL OMITTED

Mamber, Gopman, Epstein, Miles & Foosaner, by Allan M. Elster, Thomas J. Pilacek, North Miami Beach, Fla., for plaintiff.

Cohen & Hogan, P. A., by Ben Cohen, Miami Beach, Fla., for defendants.

OPINION AND ORDER AFFIRMING ARBITRATION AWARD

JAMES LAWRENCE KING, District Judge.

This action to enforce an arbitration award presents the related questions of whether an employer's unilateral refusal to grant negotiated wage increases in reliance on the wage-price freeze is an arbitrable issue and, if so, whether consideration of Pay Board regulations by the arbitrator to determine their applicability is so far beyond the proper scope of arbitration as to preclude enforcement of the award.

The undisputed facts reveal that on November 28, 1969, plaintiff Local 1115, Nursing Home, Hospital, Senior Citizens and Hotel Union, an unincorporated association, entered into valid collective bargaining agreements with defendants Hialeah Convalescent Home, Inc., Oliver Manor Nursing Center, Inc., and Ramsey Nursing Home, Inc.—all Florida corporations. The contracts provided annual wage increases for a minimum rate of $65.00 per week effective November 1, 1969, $72.50 per week effective November 1, 1970, and $85.00 per week effective November 1, 1971.

Defendants withheld the last scheduled increment on the ground that it was prohibited by the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note (1970), as amended, (Supp. I, 1971). The Act was implemented by Executive Order 11615, 3 C.F.R. 199 (Supp.1971), on August 1, 1971, for a 90-day period commonly known as Phase I; and by Executive Order 11627, 3 C. F.R. 218 (Supp.1971), issued on October 15, 1971, for Phase II which began on November 14, 1971.

Executive Order 11627 continued the Cost of Living Council, which had issued all regulations for the Phase I wage-price freeze, and established the Pay Board to assist the Council in the stabilization of wages and salaries during Phase II. The Council immediately delegated to the Pay Board authority to "establish criteria, standards, and implementation procedures designed to stabilize wages and salaries within the general economic stabilization goals and coverage determination developed by the Council." COLC Order No. 3, 36 Fed. Reg. 20202 (Oct. 15, 1971). Together, the two agencies issued initial Phase II wage control guidelines on November 13, 1971. Pay Board regulations in effect since that time have provided procedures for implementing wage increases under pre-existing contracts and for securing retroactivity where previously negotiated wage increments had fallen due during Phase I.

When defendants failed to implement the wage increase after the inception of Phase II, plaintiff moved to obtain it through arbitration as provided by the grievance procedure of the contracts. After due notice, the parties appeared before the arbitrator, Judge Jason M. Berkman, and had an opportunity to submit evidence and conduct argument. On December 7, 1971, the arbitrator submitted an award in which he ruled that defendants were obligated under the contracts to pay the negotiated increase from November 1, 1971.

Judge Berkman went on to observe that the wage-price freeze was inapplicable by its terms as a bar to payment of the scheduled increases. He noted that Phase II guidelines did not apply to preclude the wage increment; rather, under Pay Board regulations, defendants had become obligated during Phase II to pay the increase pending an adverse determination of the Pay Board, and the burden of securing such a ruling, if desired, fell on defendants.

The arbitrator also pointed out that no bar remained during Phase II to payment of that portion of the contractual increase due for work completed during Phase I, given his finding that the employees affected had been earning less than $2.00 per hour: the Pay Board had authorized such retroactive payments in cases of "severe inequity," which it defined to include those who earned less than $2.00 per hour at the start of Phase I.

Upon defendants' failure to comply with the order of the arbitrator, this action was brought to enforce the award and is now before us on cross motions for summary judgment. The Court has jurisdiction under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185 (1970).

ARBITRABILITY

Defendants contend that the matters on which the arbitrator ruled were not arbitrable under their contracts. Plaintiff responds with the threshold argument that this question may not properly be raised in an action to enforce an arbitration award, even conceding that defendant contested arbitrability from the start.

A.

Whether the issue of arbitrability may be considered in an action to enforce an arbitration award, as opposed to a suit to enforce an agreement to arbitrate, has apparently never been directly decided. There is authority in this circuit for the proposition that absent a challenge to the jurisdiction of the arbitrator or the regularity of the proceedings, a claimant may not collaterally attack the arbitrability of the dispute. Woolley v. Eastern Air Lines, Inc., 250 F.2d 86, 91 (5th Cir. 1957); Sigfred v. Pan American World Airways, 230 F.2d 13, 17 (5th Cir. 1956). Moreover, plaintiff notes that the Ninth Circuit has gone so far as to imply waiver of the arbitrability issue from the mere act of submitting to arbitration, declaring that "a claimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrators to act." Ficek v. Southern Pacific Co., 338 F.2d 655, 657 (9th Cir. 1964) (emphasis added).

However appealing this view may be, these cases challenging Railway Labor Act adjustment board arbitrations are not apposite. They interpret Congressional intent in that Act to require a voluntary election by claimants between the courts and the adjustment tribunals it authorizes. Even if we were to accept, arguendo, the doubtful proposition that Congressional intent was identical in the Labor Management Relations Act, we would be compelled to point out that defendants here are not "claimants." Rather, they were called into arbitration, protesting all the while that they had never agreed to arbitrate the issues and acceding to the process only on the understanding that to do so would not prejudice their right to a court hearing on arbitrability. Nor can it be said that defendants sought two bites at the apple under the arbitration agreements here. Had they chosen to delay resolution of the dispute by refusing to arbitrate without a court order holding the issue arbitrable, their demand would have been honored.

On the other hand, defendants' contention that waiver is never to be implied in labor proceedings, but that there must be a voluntary waiver of a known right, is equally wide of the mark. That rule emerged from actions to enforce National Labor Relations Board refusal-to-bargain orders and was based on alleged union waiver of contractual rights. Sinclair Refining Co. v. NLRB, 306 F.2d 569, 575 (5th Cir. 1962); NLRB v. Gulf Atlantic Warehouse Co., 291 F.2d 475, 477 (5th Cir. 1961); Medo Photo Supply Corp. v. NLRB, 321 U.S. 678, 687, 64 S.Ct. 830, 88 L.Ed. 1007 (1944). If defendants waived any right, it was not a contractual, but a statutory one. The right they sought to protect, a judicial determination of arbitrability, was created not by the labor agreements but by an act of Congress with a cognizable legislative intent to allocate jurisdiction between the labor board and the courts so as best to effectuate differing labor policies. See Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 452, 77 S.Ct. 923, 1 L.Ed.2d 972 (1957). Because of these policy differences, we are not prepared to say that there might be no circumstances in which an employer's or union's waiver of arbitrability could not be implied from the fact that the parties proceeded to arbitration.

The principle which must guide resolution of the question before us emanates from Section 203(d) of the Labor Management Relations Act, 29 U.S.C. § 173(d) (1970): "Final adjustment by a method agreed upon by the parties is hereby declared to be the desirable method for settlement of grievance disputes . . . ." In interpreting this provision, the Supreme Court has emphasized that arbitration of employer-employee disputes is not a substitute for litigation; rather, it is a substitute for industrial strife. United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). We therefore find it difficult to conclude that either party to a labor dispute should be penalized for proceeding directly to arbitration in a good faith effort to prevent delay. Such a ruling would mean that no employer wishing to contest arbitrability could afford to go to arbitration without a court order compelling him to do so, regardless of the consequences for the prevention of industrial strife. Thus, to hold that defendants waived their right to challenge arbitrability, despite their good faith and their express efforts to reserve the issue for judicial consideration, could only undermine the "congressional policy in favor of settlement of disputes by the parties through the machinery of arbitration." Id. at 582, 80 S.Ct. at 1353.

The only factor which might militate against consideration of arbitrability in a proceeding to enforce an arbitration award is the danger of its confusion with the issue of whether the arbitrator exceeded the scope of his authority. However similar, the two inquiries must be carefully distinguished, for the proper purview of each...